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Comercial loan bubble bursting soon is the real crisis!

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posted on Feb, 2 2009 @ 11:58 PM
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All the talk about failed mortgages and personal bankruptcy is all I hear? The housing bubble will soon be overshadowed when the next wave of destruction hits the American economy. That wave of destruction is the commercial and business loans that can bankrupt without discrimination. Commercial loans are structured on 5-7 year balloons, 7 years being a rarity. Normally every five years businesses are faced with having to, either pay the entire balance, or refinance the balance into a new five year balloon loan.

I imagine this is due to the sizes of loans in the commercial sector? Whatever the reason for it, this is disastrous to small business if the banks are not willing to finance. The current financial position of a company matters not if you're unable to obtain financing. If the credit availability does not loosen up, there will be a commercial bubble burst. This will bankrupt even the good businesses that are having success in the current economy and will dwarf the housing bubble.

I see this coming very soon and it's frustrating that so little is mentioned of it? I know that Washington is aware of this. Seeing them ignore it only solidifies my opinion of their direct role in our situation. This is a hold up on the grandest of scales and our lawmakers are the culprits.

What does everyone think? I wanted to get this out there regardless if it can help? I'd also like to hear some opinions, and situations of folks facing this exact problem.




posted on Feb, 3 2009 @ 12:06 AM
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youre 100% right, many economist have been warning america about this for some time now. the commercial bubble will make the housing forclousure thing look like a walk in the park. if you look at the governmental policies and bogus stimulous package it looks as if the U.S governmetn is encouraging a crash of the U.S markets, it appears engineered



posted on Feb, 3 2009 @ 12:18 AM
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Though this will be a huge deal and further damage the economy heavily.

The really big problem facing the country is the entitlement programs like social security and medicare when baby boomers start becoming eligible this will drain the system.

They might have to eliminate the programs like companies had to eliminate their entitlement programs.



posted on Feb, 3 2009 @ 12:24 AM
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The real apocolypse is going to come when companies like Citibank and Chase Manhattan can no longer afford to extend credit and all of those shiny plastic Visa cards become worth zilch.


How many folks right now are out there living on nothing but credit cards to get them through? Im thinking credit cards are just about the last piece of tape holding this whole thing together right now. Once they are gone a lot of people will be entirely done for.


Commercial lending, as far as I know, is still holding up to a satisfactory level at the moment. While I agree that it will likely become an issue at some point, it will just be one more failing enterprise in a tidal wave of financial chaos.



posted on Feb, 3 2009 @ 12:26 AM
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reply to post by Zerbst
 

Holy...... Zerbst, you're right!
This could be the third wave.
But.



posted on Feb, 3 2009 @ 01:35 PM
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So wht do you think will happen to the people who own credit cards and are in good standing . Will they lose their lines of credit will they be SOL also?



posted on Feb, 3 2009 @ 01:40 PM
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Originally posted by Desolate Cancer

So wht do you think will happen to the people who own credit cards and are in good standing . Will they lose their lines of credit will they be SOL also?



More than likely. The way credit is scored is going to have to be completely revamped after this is over. There is already internal talk of this at places like Equifax. This will get interesting.



posted on Feb, 3 2009 @ 07:40 PM
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Originally posted by elston

Originally posted by Desolate Cancer

So wht do you think will happen to the people who own credit cards and are in good standing . Will they lose their lines of credit will they be SOL also?



More than likely. The way credit is scored is going to have to be completely revamped after this is over. There is already internal talk of this at places like Equifax. This will get interesting.


I second this conclusion. The entire system will break down once consumers with bad credit outnumber those with good. Keep in mind that consumption and interest payments is what they need from us. It's a mistake to confuse who needs who. They will surely find a way to let us pay them variable interest again. The question is why would we let them? This is a rare opportunity that puts the ball in our court for once. We need to use it wisely!

We need to redirect our focus and, if we can, find a way around credit all together? That opportunity may be here and now, but we must change our thinking to take advantage? I have broke out of my negative patterned ways! I refuse to be owned by greedy perverts. I have hope for a new chapter of mankind being powerfully united as one. Maybe it will catch on?



posted on Feb, 3 2009 @ 08:15 PM
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Friends of mine call our nation's (and the world's) current financial situation "the perfect storm" and I have to agree.

You've got the mortgage/foreclosures crisis, commercial deals collapsing, frozen credit on all levels, national debt going into the stratosphere, the derivatives (that's the freakin' 800 pound gorilla) and it's all right now like a stunt plane at the top of a vertical twist right before the dive when like, we're weightless for a few seconds.

Hey, the hardest crash in recorded history is going to happen this year or next year, sorry to say but it's true.

Hold on to your hats folks! This is going to get real ugly before any kind of recovery if recovery is even possible.

Regenerative commercial loans are going to be outlayed to rock solid companies only --- but the problem is, how many rock solid companies are there out there right now --- zero!

OP is right on, baby. This is the next wave. Commercial sector bankruptcies out the kazoo!

OMG, stock up on canned soups... you're going to need 'em. *sigh*



posted on Feb, 3 2009 @ 09:29 PM
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The real problem is that money is going to the companies that do not deserve such handouts for poor management instead of going to the consumers, like you and me.

The "top down" economic model doesn't work very well; and it hasn't since Reagan initiated it. Giving money to corporations isn't helping; in fact, it just further stretches out the current problems we face. The money isn't really spent by theses companies; it seems, that the money is really going to just pad the balance sheet, income statement, or cash flows statement to keep investors happy.

I belive Zerbst is quite correct in the assesment of the situation. Right now I wonder if there are more people with bad credit than good. Even though the ebb has been slowed in the houses in my neighborhood that are foreclosed, I've seen at least 2 more in the recent weeks; they also do not appear to be rent houses either. Currently, myparents are trying to "take out a loan" using the equity from the house to fix it up; its a lot different now, and its probably the way it should have been in the first place.

I believe, like Zerbst, that we do have the ball in our court and can fix this problem, however, how many people are going to be resposinble? I've made numerous posts on this in the last two years, yet sadly, people continue to spend, spend, spend when they don't have money. I'm sort of lucky though...I work in the Health Care field, one that isn't going to go away. My job might not be the greatest, or pay the best, but I'm glad to have it, and with fiscal responsibility, I'm debt free...except for the college loans, which I pay back a little every month.



posted on Feb, 3 2009 @ 09:39 PM
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Commercial loans solidly frozen iceberg style...

"This will bankrupt even the good businesses that are having success in the current economy and will dwarf the housing bubble."

This is so right on.



posted on Feb, 3 2009 @ 10:29 PM
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Originally posted by Zerbst
Keep in mind that consumption and interest payments is what they need from us. It's a mistake to confuse who needs who. They will surely find a way to let us pay them variable interest again. The question is why would we let them? This is a rare opportunity that puts the ball in our court for once. We need to use it wisely!

We need to redirect our focus and, if we can, find a way around credit all together? That opportunity may be here and now, but we must change our thinking to take advantage? I have broke out of my negative patterned ways! I refuse to be owned by greedy perverts. I have hope for a new chapter of mankind being powerfully united as one. Maybe it will catch on?


What exactly is wrong with credit? Most companies have been started by taking out a loan or credit from someone/institution. Credit is an amazing invention and is a huge HUGE reason for the life of luxury the western world lives in. You probably wouldnt have a job if it wasnt for the credit extended to the entrepreneur who started your company (just an example i dont know your story).

Yes it was abused and now everyone will pay for it, but dont blame the amoral credit, blame the immoral bankers and decision makers.



posted on Feb, 3 2009 @ 10:50 PM
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reply to post by Desolate Cancer
 


You're right, there's nothing wrong with credit.

But the problem now is that almost all credit is FROZEN. It may not seem that bad to
most people right now but just hold on... this is the main horror of the financial industry
and commercial capitalism... credit is either frozen stiff or well on the way to ice cold
frozen... why?... real wealth/cash/value has been sucked into a black hole that is so strong the light of day can't escape it... the reason: leveraging and over-extension on a
scale never before seen in the history of mankind.

There exists trillions more debt than the world can pay off. We're all in over our heads
collectively whether we are OK personally or not. It's the collective black hole of debt
that is bringing everything down and it's all connected... everything's connected.

The derivatives debt burden worldwide is what all these governments and economists
are scared out of their gourds about... it is why you keep hearing that The Fed is prepared to "use more tools in the toolbox" but hey, they can't stop the unprecedented
crash that's going to happen unless the world's governments all get together and hit
the delete button on these massive debts.

I'm as against the NWO as the next guy, but this time the world needs to get together
and wipe out the derivatives in one fell swoop, shore up all major banking institutions while at the same time (and this is the critically important part) institute banking reforms so that the average Joe consumer as well as corporations big and small are not gouged continually as has been the case for years leading up to this mess.

We're talking the world debt is more trillions than the world GDP. This has never happened before. That's why all the governments are scared out of their gourds. This is all about to collapse big time.



posted on Feb, 4 2009 @ 12:12 AM
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Originally posted by invisibleman11
youre 100% right, many economist have been warning america about this for some time now. the commercial bubble will make the housing forclousure thing look like a walk in the park. if you look at the governmental policies and bogus stimulous package it looks as if the U.S governmetn is encouraging a crash of the U.S markets, it appears engineered



All of this hyperbole without anything to back it up!


WHY? Why will this make the housing foreclosure look like a walk in the park?


WHY? Why do you think the stimulus package looks like encouragement of a crash?

WHY WHY WHY????

Why do you post vitriol without any substance?



posted on Feb, 4 2009 @ 12:13 AM
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reply to post by switching yard
 


Thank you for giving background for your statements.





BTW, here is the first link in this entire thread...


www.nashvillecitypaper.com...





The U.S. government must act to restore lending for commercial real estate as the default rate mortgages held by federally insured banks doubles to a projected 3.9 percent this year, economist Sam Chandan said.

“It is critical that we take decisive action,” said Chandan, president and chief economist of Real Estate Economics LLC, a New York-based property analysis and risk advisory firm. “Unless commercial mortgage markets ease or additional sources of credit come to bear, the imbalance in the demand for credit and in credit availability will result in a larger number of defaults.”

Defaults on commercial loans are climbing as the collapse of the securitized loan market and stricter lending standards block borrowers from refinancing and the slowing U.S. economy pushes rents lower. Escrow balances available to pay interest and principal on loans are shrinking, Chandan said.

The projected default rate of 3.9 percent for this year, up from an estimated 1.8 percent in the fourth quarter of 2008, may rise further as more loans mature, Chandan said. Defaults will climb to 4.7 percent by the end of 2010 and peak at 4.8 percent in 2011, before retreating to 4.2 percent in 2012, Chandan estimates.

Those projections “assume no boost to liquidity” in the commercial mortgage market, Chandan said. He said the projections could be revised “significantly” as a result of new policy developments.



[edit on 4-2-2009 by HunkaHunka]



posted on Feb, 4 2009 @ 11:58 AM
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All of these are serious issues facing the US economy and creating a "perfect storm" of financial "catastrophe" as Obama said today. Obama knows it. We should all take heed on this - no conspiracy theory or "doom and gloom" this time. This is simply reality.

We do not have much control so all 300 million of us are along for the ride. UK may sink first. The rest you can imagine over time. I hope my baby that is due in September will have a decent life. I may be apologizing to them for the stupidity of mankind. Not all mankind. Just a few greedy ones.

April and May. I think those months. Will be bad.



posted on Feb, 4 2009 @ 05:46 PM
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here's a link to a 60 minutes segment done a couple of months ago about the '2nd wave'.

www.cbsnews.com...



posted on Feb, 5 2009 @ 05:08 PM
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Originally posted by Desolate Cancer

Originally posted by Zerbst
Keep in mind that consumption and interest payments is what they need from us. It's a mistake to confuse who needs who. They will surely find a way to let us pay them variable interest again. The question is why would we let them? This is a rare opportunity that puts the ball in our court for once. We need to use it wisely!

We need to redirect our focus and, if we can, find a way around credit all together? That opportunity may be here and now, but we must change our thinking to take advantage? I have broke out of my negative patterned ways! I refuse to be owned by greedy perverts. I have hope for a new chapter of mankind being powerfully united as one. Maybe it will catch on?


What exactly is wrong with credit? Most companies have been started by taking out a loan or credit from someone/institution. Credit is an amazing invention and is a huge HUGE reason for the life of luxury the western world lives in. You probably wouldnt have a job if it wasnt for the credit extended to the entrepreneur who started your company (just an example i dont know your story).

Yes it was abused and now everyone will pay for it, but dont blame the amoral credit, blame the immoral bankers and decision makers.



I never intended for this to be construed as an opposition to credit. If this is reflected in my posts it is not my intention? What I'm trying to get across is quite the opposite in that the sudden absence of credit is what can be devastating to the small business community and the jobs it creates.

I agree 100% that credit plays a vital role in our current market structure and creates many opportunities. However, while credit may have solely given a business it's life, when credit is structured in a way that it later can be dangled out of reach, it can also be the single reason for it's demise. This is happening right now causing many failures and job losses throughout America. Unfortunately, I'm speaking from first hand experience.

What I meant was we may have a chance to restructure the system of credit as so to reduce these possibilities? From my personal perspective, facing bank repossession and bankruptcy today due to credit availability, when comparing to events in housing, may later have me paying again in bailout taxation?

If your lender takes away your assets in default, they have recovered sufficient collateral according to their original terms. How is it logical that they are to be further compensated by government bailout funds? If lenders are being offered this dual compensation, as well as sole discretion of determining credit worthiness, why wouldn't they tighten up lending? This is what I would like to see eliminated. A system that can offer this funding in a much more secure way. Considering that small business is by far providing the majority of jobs and tax revenue, protecting it's existence should be a much higher priority. Being at the mercy of foreign banks is suicide and that has now become reality.

In my case I was the entrepreneur who started my company with credit. I now, along with my staff, do NOT have a job because of the credit that was taken away from me due to unavailability. This is what I feel is exactly wrong with credit. The fact is that these conditions can be artificially created as a tool to redistribute wealth. All I am asking is that WE understand the possibility that this may very well be what is going on right now? If so, WE should find a way to make sure it never happens again. It's the least WE should do considering WE are the only ones being hurt by it.



posted on Feb, 5 2009 @ 05:50 PM
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Commercial loans are nothing! I thought this thread was going to be about the huge derivatives bubble--estimated at over $50 trillion--yes, trillion dollars. That's several times the entire world GDP.

CDS's: credit default swaps, for short. The idea was that companies would get "informal" insurance for debt exposure. I insure you, you insure me; who needs--or wants--to pay for real insurance?

Wall Street sharks saw this market as a great way to speculate, as you have to pay a small percentage on these "bets," and with the SEC gutted and not willing to regulate the market, it balooned and is today totally out of control.

This is the elephant in the closet. This is why you see such unprecedented gov't intervention to keep the big financial firms from collapsing. If one goes, it will likely set off a derivatives default meltdown.



posted on Feb, 5 2009 @ 05:56 PM
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The real problem is our bubble machine is broken and we can't get it fixed. If our bubble machine was working we would of already had the next big bubble starting and everybody would be ignoring the last bubble that popped. So call the repair man and get the bubble machine working again and everything will go back to normal.



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